I am also having this issue. As far as I can tell, I only noticed it after the latest update (WDTV Live 1.04.31)
UPDATE:
I re-installed the latest WDTV Live Firmware 1.04.31 from a USB Drive (NOT VIA INTERNET) and it solved the problem. I suspect that the update via the Internet didn’t complete successfully last time.
To re-install the firmware, download the firmware from here http://www.wdc.com/wdproducts/updates/?family=wdfwdtv_live
Unzip and put the contents of the folder onto the root of a USB Drive
Before you remove the USB drive from your PC and connect it to your WDTV Live you must do the following:
Open wdtvlive.ver with notepad or any text editor
You should see the following in the file
VERSION='1.04.31_V'
LOCATION='wdtvlive.bin'
PKG_LOCATION='wdtvlive.pkg'
Change the version number up a digit. For example I changed mine to:
VERSION='2.04.31_V'
LOCATION='wdtvlive.bin'
PKG_LOCATION='wdtvlive.pkg'
This is so the WDTV will think it’s a newer firmware and allow you to re-install it.
Hope this works for you.